You'll find in this Wiki page all required information to achieve this, but i wanted to share my own experience to help you implementing this great feature!

I recommend you to use XBMC Frodo v12, even if not yet stable this version will work better in this configuration as it is able to deal itself with shared Library data like thumbnails and fanart.

With XBMC Eden (v11) sharing the Library works too but you have to synchronize yourself Thumbnails Datas.

Let's start ^^

1. Share your files

First consider your sharing protocol:
You may use 2 major file sharing protocols to share your Media Library, SMB protocol which is the most implemented (used by Windows, implemented in Linux through Samba) or NFS. (Network File System, more known in Unix World)

Choosing is simple, if you have or plan to have Windows XBMC clients, use SMB with Samba.
If you only have Linux Based XBMC, you should use NFS because of betters speed performances.

Note: NFS will also be supported in XBMC under Windows, but you could lack performances

To share your file with SMB using Samba:

If it's not already installed, you have to get samba up and running to share your Multimedia files between your XBMC instances:

Note: "async" option is not recommended for secured write operations, but an XBMC client should not expected to have write operations), this option may enhance NFS performances)
You can also choose "sync".

Restart NFS Server:

sudo /etc/init.d/nfs-kernel-server restart

2. Install and setup Mysql for your Database

Extracted from main XBMC Wiki page, follow these instructions:

Install Mysql:

$ sudo apt-get install mysql

- Create a main admin password when asked

- After installation has complete, edit "/etc/mysql/my.cnf" and do changes as follows:

Look for the line "bind-address" and change "127.0.01" with your host IP address.
You can also simply comment this line to allow access from anywhere.

Restart Mysql:

$ sudo service mysql restart

Login to Mysql using client (adapt password):

$ mysql -u root -p

Create the XBMC user, set password and rights, enter commands as follows:

CREATE USER 'xbmc' IDENTIFIED BY 'xbmc';
GRANT ALL ON *.* TO 'xbmc';

Exit mysql client. (exit)

3. Set up XBMC

At this point, if you already have set your Media Library inside your main XBMC installation, you have 2 possibilities:

Converting your existing Media Library

Re-creating your Media Library from scratch

To be honest, even if you have a big Media Library, converting it will be enough complicated for not so much benefits.

This is my opinion, but i would recommend to completely re-create your Library from scratch, this is much easier than converting it, moreover that you won't loose your existing thumbnails and fanart.

For any other XBMC instances, just copy your main XBMC instance sources.xm file to your clients.

This is very important as all of your XBMC instances have to use the same source settings, using SMB shares.

To achieve this, nothing more simple :-)

"sources.xml" is located in "~/.xbmc/userdata/sources.xml"

If you have playlists and favorites, you can also just copy them from your main XBMC instance to client instances:

Playlists are located in "~/.xbmc/userdata/playlists"

favourites.xml in "~/.xbmc/userdata/favourites.xml"

Final before launching your XBMC client:

About fanarts and other datas:

- If your clients are running XBMC Frodo (v12), then you don't have nothing to do.
XBMC will take care itself with fanart and other data.
Any future added Media will also be available in clients, including Thumbnails and fanart.

- If you have clients with XBMC Eden (v11), you have to copy the Thumbnails directory from your main XBMC instance: ~/.xbmc/userdata/Thumbnails/

For future media add, it will be available on both main XBMC and clients, but you won't get Thumbnails and fanart in clients.

For this to work, you will have to set scrappers in clients too (as in main XBMC instance) and scan for new medias each time you added some. (or enable scan at launch time)